Former CEO of American International Group Inc., Maurice "Hank" Greenberg Photo: Reuters

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Payback’s a bitch. Just ask veteran insurance titan Hank Greenberg.

In his new book, “The AIG Story” (co-written with Lawrence A. Cunningham and coming out this week), Greenberg says that in the summer of 2008, the company was in contentious talks with Goldman Sachs and other investment banks to settle trillions in claims on questionable derivatives linked to debt obligations that Wall Street banks were writing.

Before any deal could be brokered between Chief Executive Robert Willumstad and the banks, Lehman Bros. filed for bankruptcy, and AIG, along with hundreds of other firms, were no longer able to fund day-to-day operations.

Willumstad was talking with NY Fed chief Tim Geithner and Treasury officials the weekend prior to Lehman’s filing, to get a temporary loan.

Greenberg points out, “The Fed opened its discount window to nearly any applicant, dispensing hundreds of billions in loans to nearly any applicant. Dexia of Belgium, Depfa Bank of Ireland, the Bank of Scotland, and the Arab Banking Corp., then 29 percent owned by the Libyan central bank.”

But on that Monday, Willumstad was told by Treasury chief Hank Paulson and Geithner that the window was slammed for AIG.

“Had the Fed opened the discount window to AIG . . . the liquidity crisis would have been nipped in the bud.”

Greenberg then relates how Goldman got its pound of flesh from AIG. Rather than go back to negotiations on their debt — which likely would have resulted in cents on the dollar — the government arranged a back-door bailout.

Greenberg says on Monday night Paulson hastily fired Willumstad and began the seizure of AIG. Paulson appointed Ed Liddy — a man Paulson nominated for the Goldman Sachs board — as AIG’s head. Liddy became a “one-man creditors committee to follow orders from Paulson and Geithner,” Greenberg writes.

Both Paulson and Geithner did not want this to look like a taxpayer bailout of AIG and attached very harsh terms to any help.

“Aware that he had scant legal authority to fire Willumstad or commandeer AIG’s equity, Paulson that evening succumbed to a bout of the dry heaves. Geithner worried that the terms were draconian,” the book says.

“Like dogs sensing weakness, [Paulson] and the Goldman alumni on his staff may have found it convenient to roll over AIG to prop up the old firm [Goldman].

“The conflict of interest was clear but ignored: A Goldman director signed over AIG to the government, which would call all the shots in settling fateful negotiations.”

In the end, Liddy agreed to a $60 billion loan to AIG; that cash went quickly out the back door to a small group of banks both here and abroad, including Goldman’s $14 billion.

Greenberg called the loan rigged. “The terms were bizarre: There was no relationship between the stock and the loan, as the government would keep the stock even after AIG repaid the loan in full.

“It’s as if your bank lent you money to buy a home, and even if you repaid the loan, the bank took ownership of your home as well.”